The Furlough scheme has been crucial during this Covid Pandemic. With the closure of non-essential stores and businesses, so many people were out of work. The Furlough scheme gave them an income while they were out of work. This was essential for the survival of many people and their families. But why else was it so important?
What Is Furlough?
Well, it generally means that if you are out of work due to Covid 19, the government will pay up to 80% of your wages. It is a lot more complicated than that, but it is what it means in essence. Being out of work with no income would have very easily ruined and destroyed many families and people, not to mention the economy. Money is important to pay for the essential that we were only meant to be leaving the house for. But 80% still meant that a lot of people could not manage. Many businesses have been forced to close because there is no income for them and thus this means that they have gone out of business.
The Big Bill
The issue with the furlough scheme would be that the government is borrowing heavily to pay for it. Is it necessary? Yes. We have fought a long war through the years to reduce poverty and not having the furlough scheme would have meant that unemployment would have been at an all-time high as would homelessness. With many restrictions looking to remain in place, furlough is a lifeline for many in the hospitality industry. Bars and restaurants and such will be among the last to be allowed to reopen and the first to shut again if necessary. Furlough is what is seeing them and their employers through these difficult times. (source).
Impact on the economy
Well, the economy has undoubtedly suffered in this Pandemic. With so many businesses closed or working from home, many industries are struggling. The Hospitality industry is one of the hardest hit. They have the lowest percentage of business trading at 75% compared to 85% in other industries. They are also the industry with the highest percentage of businesses with no cash reserves. With each Wave of infection, the number of people on furlough has eased by at least 20% as businesses are trying to adapt to the new ways they have to conduct their business to survive. (source).
In order to survive, many businesses are having to cut jobs to preserve resources, or simply because they found that the way they were working through the lockdowns has worked quite well for them. Even with the Covid vaccine, there has still been a great many jobs lost. Unemployment and redundancies have increased dramatically over the past few months as many businesses simply cannot afford to reemploy their employees. It would have been a great deal worse without the furlough scheme. (source).
The Furlough scheme has been invaluable to a great many people because it has given them a way to survive through the times when the pandemic forces them to remain home. The Furlough scheme is what has allowed our economy to survive, even slightly. The Extension has meant that there is more time for businesses to recover and rebuild to the point that their companies can afford to rehire employees and take them off of furlough. Silver Insolvency Solutions has worked with countless businesses to help them get to the point that their business is solvent again and can afford to rehire employees. To find out more, visit our website on https://www.silverinsolvencysolutions.co.uk/, email us on enquires@silverinsolvencysolutions.co.uk, or give us a call on 0203 961 7169.